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Is FNMIX a Strong Bond Fund Right Now?

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If you've been stuck searching for International Bond - Emerging funds, you might want to consider passing on by Fidelity New Markets Income (FNMIX - Free Report) as a possibility. FNMIX has a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on nine forecasting factors like size, cost, and past performance.

Objective

We note that FNMIX is an International Bond - Emerging option, which is loaded with different choices. International Bond - Emerging funds focus on fixed income securities from a variety of emerging international markets. Typically, investors can expect exposure to economies like China, Brazil, India, South Africa, Indonesia, and many others. These funds are appealing because of their geographic diversification, but this can also mean that currency risk is a factor.

History of Fund/Manager

Fidelity is based in Boston, MA, and is the manager of FNMIX. Since Fidelity New Markets Income made its debut in May of 1993, FNMIX has garnered more than $3.46 billion in assets. Timothy Gill is the fund's current manager and has held that role since January of 2019.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund in particular has delivered a 5-year annualized total return of 3.89%, and is in the middle third among its category peers. If you're interested in shorter time frames, do not dismiss looking at the fund's 3-year annualized total return of 4.54%, which places it in the middle third during this time-frame.

When looking at a fund's performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. FNMIX's standard deviation over the past three years is 11.43% compared to the category average of 14%. The standard deviation of the fund over the past 5 years is 9.46% compared to the category average of 11.6%. This makes the fund less volatile than its peers over the past half-decade.

This fund has a beta of 0.77, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, FNMIX has a positive alpha of 1.34, which measures performance on a risk-adjusted basis.

Ratings

Investors should also consider a bond's rating, which is a grade ( 'AAA' to 'D' ) given to a bond that indicates its credit quality. With this letter scale in mind, FNMIX 's junk bond component-bonds rated 'BB' or below-is at 59.78%. This means that the fund has an average quality of BBB, and focuses on medium quality securities.

Expenses

For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, FNMIX is a no load fund. It has an expense ratio of 0.80% compared to the category average of 1.12%. So, FNMIX is actually cheaper than its peers from a cost perspective.

Investors should also note that the minimum initial investment for the product is $0 and that each subsequent investment has no minimum amount.

Bottom Line

Overall, Fidelity New Markets Income ( FNMIX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, this fund looks like a somewhat weak choice for investors right now.

For additional information on this product, or to compare it to other mutual funds in the International Bond - Emerging, make sure to go to www.zacks.com/funds/mutual-funds for additional information. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.


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